American Specialty moving headquarters

Enticed by $11.5 million in tax credits and driven by a need for greater geographic diversification, American Specialty Health said Friday it will move its corporate headquarters from San Diego to Indiana in 2014.

American Specialty, founded in San Diego 25 years ago, operates 13 subsidiaries that manage a range of services from specialty health networks for insurance companies to health and fitness programs for businesses.

Chief Executive George DeVries said there is no plan to close the existing San Diego office, which now employs about 850 people. About 675 jobs, he said, will remain in San Diego, including a 300-person call center that will handle claims processing, health coaching and other services. An additional 375 corporate service positions will remain, and the company’s 30-person executive team will be split among San Diego, Indiana and a location in Texas.

DeVries, who hails from Indiana, said his company’s five-year growth plan calls for adding about 700 employees, with much of that growth occurring outside California. He said that, as the company develops a larger nationwide presence, it has become important to have multiple locations that can back each other up in an emergency like a power outage or natural disaster.

“This move is really part of a long-term strategy to make us a stronger national company,” he said.

He said the Indiana Economic Development Corp. will provide $11.5 million in tax credits, granted over a 10-year period, for the company to build a $10 million headquarters building in Carmel, a suburb of Indianapolis. Carmel was named the best place to live in the nation in 2012 by Money Magazine.

The San Diego Regional Economic Development Corp. said it tried to change American Specialty’s mind.

CEO Mark Cafferty said EDC staffers reached out to the company several months ago after members of its economic development committee heard of the proposed move.

Cafferty said it soon became clear that a Midwest location was a requirement. He said it was likely an example of family preference, combined with cheaper costs and government incentives.

Citing housing costs that are 75 percent lower in Carmel compared to San Diego, and commercial real estate prices that are about 33 percent lower, DeVries said the cost of living definitely played a role in where his company decided to grow.

“Only 20 to 25 percent of San Diegans can afford to buy a house. Out here in Indiana, virtually all of our employees can afford to buy a home or a condo, and that is meaningful to us,” he said.

Cafferty said the EDC raised a red flag about the proposed move, but it did not rise to the level of a “red carpet,” where the nonprofit makes major efforts to retain or attract a company.

Cafferty said the move is indicative of a bigger issue.

“We’re not seeing a staggering number of companies saying they’re upping and leaving California,” he said. “But we’re also not seeing companies saying that they can grow here.”

Cafferty said the EDC sometimes tries to get its private-sector partners to step up and lower a company’s costs if they are considering San Diego, but he doesn’t have many tools to point them to on the state government level.

That could change Jan. 1, when California creates an agency that will offer corporations and small businesses tax incentives to create jobs here. Gov. Jerry Brown is shifting $750 million from the Enterprise Zone program, which will be phased out next year.

Those dollars will be split between three new initiatives, including creation of an agency that will offer tax incentives to companies and small businesses expanding here.

The program would provide a maximum tax credit of $30 million, starting July 1, 2014. The maximum amount is currently $6 million.

The state, however, will not be writing checks to companies to move, the way Texas does. Gov. Rick Perry has made repeated trips to California to lure companies using his Texas Enterprise Fund, which wrote Petco a check for $3.1 million to relocate some of its operations from San Diego to San Antonio.

Official data are thin on how many interstate moves have been made out of California. But the National Establishment Time-Series, kept by Oakland-based Walls & Associates, shows that there were 36,000 moves out of the Golden State between 1990 and 2010.